One very effective option that can be given to someone whose home you are getting ready to acquire is to allow them to stay and rent from you. This is definitely something you can pull out of the hat when the market is hot. It can make things a little easier for that person or family having these financial problems.

The first things you will do, after getting the deed to the property, is to bring the loan current. By letting them rent their house from you, you will want to get a few months security up front from them. The possibility is always there that they may do some damages to the house during their stay, so the security payments are a must.

The next thing you will want to do is to make sure that the seller goes to an attorney's office with you and closes the sale. And everything is done above board, legitimate, everything's explained to them and you even get a witness. If you want to rent it back to them, then of course you can do so, but you do not want to give them the option to buy it back. You will want to have the attorney fill out a third grade language disclosure that you are renting the house back to her but she acknowledges and agrees that if she doesn't pay the rent she will move and if she doesn't you'll have no choice but to evict her. Again, you will want to use a good real estate attorney for this. Some have used title companies to do it. It is not recommended that you do this, because if you have an attorney do it, the seller can’t come back and claim that you took advantage of them.

When you give them the option to buy back, it can give them a much stronger case against you at a later date if they claim that you were trying to trick them. Make sure that you are not in a situation where you have to get a second mortgage to bring the owners current on their mortgage. If you have the deed, they should owe you no money from that point and you should owe them no money. When you start creating a lender-borrower relationship, then they have grounds to say that you took advantage of them and created a useless loan.

Now would you get away with that? Probably 99 out of a 100 times. However, you need to know if you're going to bury skeletons you need to know where they're buried. And you want to make sure you don't do any of this without your being in front of an attorney.

You need to sit that seller in front of that attorney and you let them close that deal and you have disclosures so thick that could sit on them. You know really all I'm telling you to do is assume they're going to come after you later, so you need to prepare yourself for it now.